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Posts Tagged ‘fiscal policy’

Chris Christie: “it will bankrupt us morally”

Posted by Richard on April 10, 2012

Gov. Chris Christie addressed the George W. Bush Institute’s Conference on Taxes and Economic Growth today and demonstrated again why many of us consider him (despite a few flaws) one of the great statesmen and great communicators in our country today. Human Events’ John Hayward reported some of Christie’s key points:

“I’ve never seen a less optimistic time in my lifetime in this country, and people wonder why,” Christie said.  “I think it’s really simple: It’s because government’s now telling them ‘stop dreaming, stop striving, we’ll take care of you.’ We’re turning into a paternalistic entitlement society.”

Christie warned this would bankrupt us both financially and morally, “because when the American people no longer believe that this is a place where only their willingness to work hard, and to act with honor and integrity and ingenuity determines their success in life, then we’ll have a bunch of people sitting on a couch waiting for their next government check.”

If you have only a few minutes, watch this 2:18 video excerpt that includes the above comments.

[YouTube link]

 But if you can spare a half hour, I strongly urge you to watch the whole speech (29:28), below. It’s highly entertaining, informative, enlightening, and uplifting. I guarantee it’s well worth your time.

[YouTube link]

John Hayward made an important point. After quoting Dan Bigman’s summary of Christie’s “reaching across the aisle” to get the support of a third of the legislature’s Democrats for addressing a state budget deficit of 30% (!) without raising taxes, he said of Christie’s “constructive compromises”:

…which actually sounds a lot more like “winning the argument” than “compromise,” in the usual mushy bipartisan drop-your-principles potato-cultivating sense our perpetually growing federal government and its attendants use the term.  Among other things, Christie stopped a “millionaire tax” in New Jersey, capped property taxes, and called for a sizable growth-oriented income tax cut.  Those aren’t the sort of sugar plums Democrats normally have dancing in their heads when they anticipate “compromise” with Republicans.

I’d characterize Christie’s approach as Reaganesque. And I wish Romney, McConnell, Boehner, and the rest of the GOP leadership would watch this speech and think about the lessons to be learned. Gentlemen, the route to victory this November doesn’t depend on pandering to moderates and independents, or watering down your message. It depends on convincing people that this country needs to be turned around. It depends on convincing people that you have a plan to prevent our impending financial and moral bankruptcy. It depends on demonstrating that you’re principled, committed to tackling the tough issues, and sincerely concerned about our country’s future. It would help to have a realistic plan for doing so and be able to present it articulately and persuasively.

Of course, that’s asking a lot of the Republican leadership.

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The modesty of the Ryan budget plan

Posted by Richard on April 7, 2012

The President called the Republican budget plan put together by Rep. Paul Ryan “social Darwinism.” And he and his fellow Socialist Democrats have pulled out all the stops in denouncing it: children will starve, old people will die, our food will poison us, and the air and water will become toxic if these draconian budget cuts are enacted.

After a cursory look when it came out, I gave the Ryan plan two cheers. But after looking at the graphs and numbers Nick Gillespie put together (from Investor’s Business Daily and the Mercatus Center’s Veronique de Rugy), I’m taking back one of those cheers.

Under the Ryan plan, government spending grows slightly more slowly than under the Obama plan. I’m guessing that’s not entirely fair to Ryan — the Obama numbers are undoubtedly much more fudged than his, so the real difference is probably much greater than it appears.

Nevertheless, the Ryan plan is a pretty modest, timid, tentative start at addressing the impending fiscal catastrophe. That the Socialist Democrats are attacking it in such over-the-top fashion indicates either that they’re totally delusional and divorced from reality or that they’re cynically betting they can defeat the Republicans by scaring the bejeezus out of all the ignorant and stupid people.

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The Ryan budget: a step in the right direction

Posted by Richard on March 20, 2012

After a cursory look at Rep. Paul Ryan’s new budget proposal, I’m inclined to give it two cheers. It’s certainly in stark contrast to the President’s bloated and irresponsible plan. And maybe it strikes an astute balance between what really needs to be done and what’s palatable, for now, to the majority of Americans. But I agree with Investor’s Business Daily:

… It’s a good start, but we’d prefer a plan that cut spending more deeply, killed off a few needless Cabinet agencies and truly embraced the Founders’ vision of a limited federal government.

Despite the wailing from Democrats about draconian spending cuts, Ryan’s near-term cuts would still leave government spending 5% more in 2014 than it did in 2008 — even after adjusting for inflation.

It never gets federal outlays below 19%, which is still too high. And annual deficits worryingly start to rise again after 2018, although at a far lower level than under Obama’s budget.

But we’ll take Ryan’s responsible and perfectly reasonable plan over Obama’s recklessness any day.

And we suspect that when voters have a chance to see the two budget futures explained to them, they will too.

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Four big lies about the debt ceiling

Posted by Richard on June 7, 2011

Tea Party Patriots, the wonderful umbrella organization of Tea Party groups across the country, is challenging head-on both Republicans and Democrats with regard to the so-called debt ceiling crisis:

At this very moment members of congress are trying to decide what pieces of America's future they will trade away as part of a deal to raise the debt ceiling. We've had the chance to talk with many of them. And even most of those who claim to be on the side of fiscal responsibility are giddy with excitement that they can trade their vote on this debt ceiling "crisis" in exchange for a handful of magic beans offered by the liberals.

Our answer is simple.

It is not acceptable to use the future of America as a bargaining chip.
Do not raise the debt ceiling.

They've identified four big lies that, in countless variations, we're going to be told over and over again in the coming weeks: 

Big Lie 1 "The current financial crisis was inherited."

Bush created all of these problems.  We are trying to solve them but it's much worse than we thought and it will take years for our solutions to have an impact."

Big Lie 2 "There's no way to cut enough spending. So we must raise the debt ceiling."

"There's no way to cut enough spending. So we must raise the debt ceiling. If we don't raise it America will not be able to pay back its creditors and the rest of the world will never trust us with money again. It will be a disaster!!!"

Big Lie 3 "We can haggle for some really great deals now that we have them over a barrel."

Members of the republican "leadership" will tell you this lie.

"Raising the debt ceiling is inevitable; and the democrats want it so badly they're willing to give us some really great deals in order to get it. We can take advantage of it and get some cool stuff in exchange for our votes. It'll be great!"

Big Lie 4 "You just don't understand all of the complicated details. Let us handle it. We're smart."

Their responses to the first three lies are excellent (I haven't see the fourth part yet). 

Check out Part 1 and Part 2 (I'll update with links to 3 and 4 when I have them, but I suspect they'll appear on the home page at some point). And please donate what you can to help them counter these lies. If you care about your future, your children's future, your grandchildren's future — this battle is very, very important.

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Tons of debt

Posted by Richard on April 16, 2011

The brilliant satirist Iowahawk has created a video that offers a unique perspective on the American government's debt and spending levels. It's at the same time entertaining and quite sobering. Please watch. And hit the Like button at the YouTube link. 

[Iowahawk link]
[YouTube link]

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America’s message to GOP: don’t cave!

Posted by Richard on April 7, 2011

The President’s meeting with John Boehner and Harry Reid ended a short time ago with no agreement, but all three claimed they were getting closer to averting a government shutdown. That concerns me, because if past history is any indication, getting closer to an agreement means the Republicans are giving ground.

Before they indulge in their natural inclination to cave and compromise, I hope Boehner and the GOP leadership take a deep breath and consider some recent poll results. For instance, this Rasmussen poll released Tuesday (emphasis added):

In the ongoing budget-cutting debate in Washington, some congressional Democrats have accused their Republican opponents of being held captive by the Tea Party movement, but voters like the Tea Party more than Congress.

The latest Rasmussen Reports national telephone survey finds that 48% of Likely U.S. Voters say when it comes to the major issues facing the country, their views are closer to the average Tea Party member as opposed to the average member of Congress.  Just 22% say their views are closest to those of the average congressman. Even more (30%) aren’t sure. (To see survey question wording, click here.)

This shows little change from a survey in late March of last year.

Forty-nine percent (49%) of voters think the Tea Party movement is good for the country, consistent with findings since May 2010. Twenty-six percent (26%) disagree and say the grassroots, small government movement is bad for America. Sixteen percent (16%) say neither.

Or this one from last Friday (emphasis added):

A majority of voters are fine with a partial shutdown of the federal government if that’s what it takes to get deeper cuts in federal government spending.

A new Rasmussen Reports national telephone survey finds that 57% of Likely U.S. Voters think making deeper spending cuts in the federal budget for 2011 is more important than avoiding a partial government shutdown. Thirty-one percent (31%) disagree and say avoiding a shutdown is more important. Twelve percent (12%) are not sure. (To see survey question wording, click here.)

Or this Fox News poll from today (emphasis added):

American voters would rather shut down the government than raise the debt limit, even though most believe a shutdown would have a dramatic effect on everyday Americans.

A Fox News poll released Wednesday asked voters to imagine being a lawmaker in Washington who had to decide whether to increase the debt ceiling. The poll found 62 percent would vote against raising it — even at the risk of shutting down the government.

About one-in-four voters (26 percent) would raise the limit to allow the government to spend more.

Or this Tarrance Group poll from a couple of days ago (underlines in original):

Voters have turned the corner and have made clear their support for deep cuts to the budget. Nearly three quarters of voters (73%) say it is very important that the budget include “significant” spending cuts.  When it comes to $100 billion in cuts, only 23% say this percentage is too high, while a majority (63%) says $100 billion is too low (34%) or about right (29%). This is virtually unchanged from February, when 21% said $60 billion was too high, and a majority (67%) said the figure was too low (36%) or about right (31%).
Supporting $100 billion in cuts would result in a net positive political impact for members of Congress.  A majority (55%) are more likely to support their member of Congress if he or she supports these cuts, while only 24% are less likely.  This is also similar to February, when 52% were more likely to re-elect their member if he or she supports $61 billion in cuts.…

When presented with three arguments about raising the debt ceiling, less than a quarter of voters most agree with the argument that the debt ceiling needs to be raised in order to avoid things like a shutdown and Social Security checks not being mailed.  In fact, a plurality chooses to NOT raise the debt ceiling at all:

30%:  Some people say that Congress should only raise the debt ceiling if it can also guarantee real, significant spending cuts starting this year.  We will never balance the budget until we drastically cut the amount of money we spend.

22%:  Other people say that Congress must act to raise the debt ceiling regardless of whether it includes spending cuts, or else the United States government will shut down and will default on its obligations, such as not being able to make Social Security checks and salaries for police and teachers.

 42%:  Still other people say that we should NOT raise the debt ceiling even if spending cuts are made because the nation must eliminate the trillion dollar debt we face instead of adding to it.

The message to the GOP leadership is clear. The American people (at least those most likely to vote) have recognized the utter seriousness of this nation’s fiscal crisis and want bold action, even if it involves temporary pain. The Democrats are in complete denial, whistling past the graveyard. If the GOP wants to be taken seriously as the party willing to address our fiscal problems seriously, they must resist the urge to compromise, wheel, and deal. Stand firm for once, you bastards!

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It’s called the stupid party for a reason

Posted by Richard on March 31, 2011

The Republicans have been pushing for $61 billion in spending cuts for FY2011 (significantly less than the $100 billion they promised before the election), and the Democrats have been denouncing even that modest cut as "draconian" and "extreme."

You'd think this would be a challenge the GOP would be eager to take on. If you have even a modicum of communication skills and public relations savvy, how hard can it be to ridicule the absurd argument that cutting $61 billion — 1.6% — out of a budget of $3,700 billion is "draconian" and "extreme"? It barely puts a tiny dent in the $1,600 billion deficit. Do they really fear that the average American can't grasp that point?

Let's put the federal fiscal crisis into comparable (approximate) household numbers that people can relate to: Let's say your household income is about $42,000 ($3500/month). But you're spending about $74,000 ($6167/month). And you're putting the $32,000 difference on your credit cards (on which you already owe over $300,000). Would cutting your spending by less than $100 a month really be "draconian"? Does it even seriously address the terrible financial situation you're in?

To me, this seems like an argument that's a slam-dunk win, especially in the political climate that gave us the Tea Party movement and resulting electoral tsunami of last November. And yet, the Republican leadership seems terrified of taking a hard stand and drawing a line in the sand. According to the Washington Post, they're ready to cave — settling for $30 billion in cuts and giving up on defunding anything — and Dan Mitchell isn't pleased: 

Yesterday, I analyzed how the GOP should fight the budget battle, but I may have made a big mistake. I assumed the Republican leadership actually wanted to do the right thing. I thought they learned the right lessons from the disastrous Bush years, and that the GOP no longer would be handmaidens for big government. And I naively assumed that the Republican leadership would not betray the base and stab the Tea Party in the back.

I thought the GOP leadership would fight and get a decent deal rather than unilaterally surrender. If the Washington Post report is true and Republicans act like the French army, it will discourage the base and cause a rift with the Tea Party. So it’s dumb politics and dumb policy.

And that display of cowardice by House Republican leaders follows on the heels of the report that Senate Republicans are going to agree to support a debt limit increase if the Democrats merely allow a symbolic vote on a balanced budget amendment. No, Democrats don't have to support it — they just have to allow a vote, which the Republicans are guaranteed to lose. A repeat of a vote they've already had (and lost), a vote that they could force by parliamentary means in any case. In other words, they're giving up their biggest leverage in return for … nothing.

Stupid party seems like such a mild and inadequate term.

There are a few shiny gems amidst the steaming pile of cow-flop that is the GOP. Sen. Marco Rubio won't vote for a debt limit increase unless it comes with a whole bunch of serious conditions: 

"Raising America's debt limit is a sign of leadership failure." So said then-Sen. Obama in 2006, when he voted against raising the debt ceiling by less than $800 billion to a new limit of $8.965 trillion. As America's debt now approaches its current $14.29 trillion limit, we are witnessing leadership failure of epic proportions.

I will vote to defeat an increase in the debt limit unless it is the last one we ever authorize and is accompanied by a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid.

Bravo. Read the whole thing

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The Obama spending binge in perspective

Posted by Richard on September 14, 2010

Here's a factoid I almost missed, and maybe you did too: In the first 19 months of the Obama presidency, the US government's publicly-held debt increased by more than it did under all presidents from George Washington through Ronald Reagan (emphasis added):

The U.S. Treasury Department divides the federal debt into two categories. One is “debt held by the public,” which includes U.S. government securities owned by individuals, corporations, state or local governments, foreign governments and other entities outside the federal government itself. The other is “intragovernmental” debt, which includes I.O.U.s the federal government gives to itself when, for example, the Treasury borrows money out of the Social Security “trust fund” to pay for expenses other than Social Security.

At the end of fiscal year 1989, which ended eight months after President Reagan left office, the total federal debt held by the public was $2.1907 trillion, according to the Congressional Budget Office. That means all U.S. presidents from George Washington through Ronald Reagan had accumulated only that much publicly held debt on behalf of American taxpayers. That is $335.3 billion less than the $2.5260 trillion that was added to the federal debt held by the public just between Jan. 20, 2009, when President Obama was inaugurated, and Aug. 20, 2010, the 19-month anniversary of Obama's inauguration.

Lots of change. Not much hope.

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A tale of two governors

Posted by Richard on July 20, 2010

I supported the successful gubernatorial campaigns of both New Jersey's Chris Christie and Virginia's Bob McDonnell. I'll support the former again in the future. But not the latter. Both governors are Republicans who claim to be fiscal conservatives, and both came into office facing budget crises. The difference in how they handled them is highly instructive, and it's a reminder that there's still plenty of rotten fruit in the GOP barrel.

Gov. Christie faced an $11 billion budget deficit, and all the powers that be in both parties declared that closing it would require a combination of "painful" cuts and tax increases (ever notice that tax increases are never described as "painful"?). Christie would have none of it. He insisted that the people of New Jersey were already overtaxed. He took on the teachers, firefighters, and police, among others, challenging their generous pensions, pay, and other benefits. He vetoed every tax increase the Democratic legislature sent him. He faced down the special interests, entrenched bureaucrats, and career pols. The result? He's immensely popular, and his balanced budget passed virtually unchanged. It's the lowest state budget in four years. 

Now, Christie is pushing a Constitutional limit on property tax increases (he's highly likely to win this fight, too). And his next big push will be for major public employee pension reforms. Christie is uncompromising, true to his word, and refreshingly direct and honest. Scores of YouTube videos of him at public appearances, addressing the legislature, etc., make it clear why some people are calling him a political "rock star." Here's a recent interview with Paul Gigot.

[YouTube link]

Meanwhile, in Virginia, Gov. McDonnell faced a $1.8 billion budget deficit. He recently crowed about turning it into a $220 million surplus. Did he, too, stare down the special interests and big-spending pols? Did he, too, cut spending by 10%? Um, apparently not. Apparently McDonnell's approach was more "go along to get along," and the surplus is being called a fraud.

It seems that McDonnell balanced the budget by borrowing from the pension fund. And by forcing retailers to remit sales taxes for July in June, before they'd even begun to collect them. And by raising taxes on manufacturers and increasing a plethora of "fees."

So, about that $220 million surplus — surely, the guv used it to partially repay the pension fund (since unlike Christie, he doesn't seem inclined to take on a pension reform battle). Or maybe he set it aside to cover the lack of sales tax revenue in July of the new fiscal year. Or maybe he just saved it for a rainy day, since Virginia's tax revenues are still declining.

None of the above. He immediately spent it:

McDonnell told a news conference that the money will go to a $82 million, 3 percent one-time bonus for state employees, to local school divisions, to the Water Quality Improvement Fund and to the transportation trust fund. 

I'd like to see Chris Christie become President. And I'd like to see Bob McDonnell recognized as the poster child for what's wrong with the Republican Party. 

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The deeming has resumed

Posted by Richard on July 2, 2010

Only 12% of likely voters think Congress is doing a good or excellent job. Lopsided majorities want the deficit drastically reduced (82%), but also think the country is already overtaxed (66%) and blame politicians' unwillingness to cut spending (83%) for the deficit. And the Congressional Budget Office has just released a grim long-term outlook (PDF) predicting things are going to get much worse.

In this climate, Congressional Socialist Democrats, already facing a tough election year, are reluctant to have to defend yet another monstrously bloated budget with yet another trillion-plus-dollar deficit. So, what to do? As Connie Hair reports, they've decided "we don't need no stinkin' budget" and have instead resurrected a sleazy strategy they were considering during the health care takeover debate: 

Last night, as part of a procedural vote on the emergency war supplemental bill, House Democrats attached a document that "deemed as passed" a non-existent $1.12 trillion budget. The execution of the "deeming" document allows Democrats to start spending money for Fiscal Year 2011 without the pesky constraints of a budget.

The procedural vote passed 215-210 with no Republicans voting in favor and 38 Democrats crossing the aisle to vote against deeming the faux budget resolution passed.

Never before — since the creation of the Congressional budget process — has the House failed to pass a budget, failed to propose a budget then deemed the non-existent budget as passed as a means to avoid a direct, recorded vote on a budget, but still allow Congress to spend taxpayer money.

House Budget Committee Ranking Member Paul Ryan (R-Wisc.) warned this was the green light for Democrats to continue their out-of-control spending virtually unchecked.

"Facing a record deficit and a tidal wave of debt, House Democrats decided it was politically inconvenient to put forward a budget and account for their fiscal recklessness. With no priorities and no restraints, the spending, taxing, and borrowing will continue unchecked for the coming fiscal year," Ryan said. "The so-called ‘budget enforcement resolution' enforces no budget, but instead provides a green light for the Appropriators to continue spending, exacerbating our looming fiscal crisis."

The Socialist Democrats and their media mouthpieces call it a "continuing budget resolution" so people will think this is no different than the continuing resolutions passed in the past when the end of the fiscal year approached and one or more of the funding bills used to enact the budget had not yet been agreed on. But as the Republicans pointed out, this "deeming" meets none of the Congressional Budget Act criteria for a budget resolution. 

The only criteria the Socialist Democrats' "deeming" meets are the criteria for a fraud and charade. 

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U.S., Europe on different paths

Posted by Richard on June 26, 2010

US Treasury Secretary Tim Geithner told the BBC that the United States can "no longer drive global growth," and that the world "cannot depend as much on the US as it did in the past." There's a good reason for that.

The administration of which Geithner is a part apparently has as its goal cutting the US down to size — hobbling our economy, reducing our standard of living, slashing the "disproportionate share of the world's resources" we consume, and driving us toward a stagnant society that's more egalitarian because the successful have been forcibly impoverished.

Geithner also said that Europe and the US are taking "different paths, at a different pace," and he's not kidding. As most other developed nations are moving away from socialism in an attempt to restore economic growth and fiscal responsibility, the Obama administration is moving the US as fast as it can in the opposite direction.

So now we have the ironic situation of European socialist countries defending their government spending cuts against attacks from Obama and arguing against Obama's calls for more government "stimulus" programs. For instance

Germany and the United States appear set for a heated showdown at this weekend's G20 summit in Canada after Chancellor Angela Merkel flatly rejected warnings from President Barack Obama that Europe's attempts to save its way out of the debt crisis could put fragile global economic growth in danger.

She added in a recent rebuttal of economic stimulus packages: "If we don't go for sustainable growth, but just create puffed-up growth, we will pay for that with another crisis." 

Merkel isn't alone. While the Obama administration embraces protectionism and fiscal profligacy, Britain's David Cameron calls for progress in the Doha free trade talks and embraces the fiscal conservatism that's becoming increasingly popular around the world:

"Delivering progress on Doha will not be easy. However, I’m also impatient for change and people in Britain, Canada, Asia, Africa and elsewhere can't wait for negotiators to come to agreement.

"World leaders have made previous commitments on Doha in good faith – but despite almost a decade of talks, there’s been no breakthrough."

The comments come as America noticeably distances itself from the economic agenda of most other world powers.

Once internationally isolated, Mr Cameron's fiscal conservatism now constitutes something akin to a consensus among world powers, and president Barack Obama is isolated in his desire for further spending – a plan he has been struggling to get through domestically.

Heck, even China has repeatedly chided the Obama administration about its fiscal irresponsibility. You know we're in trouble when the Chicoms are saying our government is getting too big.

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Concealing the grim budget news

Posted by Richard on May 26, 2010

Rick Manning of Americans for Limited Government:

House Democrats plan to leave the country without a budget according to House Majority Leader Steny Hoyer who stated, “It’s difficult to pass budgets in election years because they reflect what the [fiscal] status is.”

Now that’s courage, leadership and transparency.

Remember, the Democrats hold 59% of the seats in the House with a 255 to 176 advantage over the Republicans, yet it is too hard to put a budget together?

For perspective, consider election year 2002 when Speaker Dennis Hastert enjoyed a slender 222 to 211 advantage, yet our nation was not left without a budget.

The ranking Republican on the House Budget Committee, Paul Ryan, has called this decision, “an unprecedented failure to govern.”

I call it unprecedented cowardice and dereliction of duty.

I call it a calculated and cynical attempt to hide the ugly truth from the American people during the run-up to the November elections. Will it work? Maybe not this time. Michael Barone thinks there's something different about the current mood of the country: 

It has long been a maxim of political scientists that American voters are ideologically conservative and operationally liberal. That is another way of saying that they tend to oppose government spending in the abstract but tend to favor spending on particular programs.

In the past, rebellions against fiscal policy have concentrated on taxes rather than spending.

The rebellion against the fiscal policies of the Obama Democrats, in contrast, is concentrated on spending. The Tea Party movement began with Rick Santelli's rant in February 2009, long before the scheduled expiration of the Bush tax cuts in January 2011.

What we are seeing is a spontaneous rush of previously inactive citizens into political activity, a movement symbolized but not limited to the Tea Party movement, in response to the vast increases in federal spending that began with the TARP legislation in fall 2008 and accelerated with the Obama Democrats' stimulus package, budget and health care bills.

The Tea Party folk are focusing on something real. Federal spending is rising from about 21% to about 25% of gross domestic product — a huge increase in historic terms — and the national debt is on a trajectory to double as a percentage of gross domestic product within a decade. That is a bigger increase than anything since World War II.

I hope Barone is right — and that this long-overdue revolt against government spending is not too little or too late. 

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Restoring fiscal sanity in New Jersey

Posted by Richard on February 17, 2010

Newly elected New Jersey Governor Chris Christie addressed the legislature last week on the state's budget crisis, and I finally got around to reading the speech*. Wow. It's a humdinger — refreshingly honest, with no punches pulled and no shying away from the tough decisions. Christie quickly made clear just how dire the state's situation is:

New Jersey is in a state of financial crisis. … For the current fiscal year 2010, which has only four and one-half months left to go, the budget we have inherited has a two billion dollar gap. The budget passed less than eight months ago, in June of last year, contained all of the same worn out tricks of the trade that have become common place in Trenton, that have driven our citizens to anger and frustration and our wonderful state to the edge of bankruptcy.

What do I mean exactly? This year’s budget projected 5.1 % growth in sales tax revenue and flat growth in corporate business tax revenues. In June of 2009, was there anyone in New Jersey, other than in the department of treasury, who actually believed any revenues would grow in 2009-2010? With spiraling unemployment heading over 10%, with a financial system in crisis and with consumers petrified to spend, only Trenton treasury officials could certify that kind of growth. In fact, sales tax revenue is not up 5%, it is down 5.5 %; and corporate business tax revenue is not flat, it is down 8%. Any wonder why we are in such big trouble? Any question why the people don’t trust their government anymore and demanded change in November? Today, we must make a pact with each other to end this reckless conduct with the people’s government. Today, we come to terms with the fact that we cannot spend money on everything we want. Today, the days of Alice in Wonderland budgeting in Trenton end.

Our Constitution requires a balanced budget. Our commitment requires us to begin the next fiscal year with a prudent opening balance. Our conscience and common sense require us to fix the problem in a way that does not raise taxes on the most overtaxed citizens in America. Our love for our children requires that we do not shove today’s problems under the rug only to be discovered again tomorrow. Our sense of decency must require that we stop using tricks that will make next year’s budget problem even worse.

Christie cut spending in 375 state programs — practically everything he could legally cut by executive action — in order to close the $2 billion current-year shortfall. Then he took aim on the years to follow and made it clear that biggest problem is an absurdly generous pension and benefit program for the state's unionized workers: 

I am encouraged by the bi-partisan bills filed in the Senate this week to begin pension and benefit reform. … 

These bills must just mark the beginning, not the end, of our conversation and actions on pension and benefit reform. Because make no mistake about it, pensions and benefits are the major driver of our spending increases at all levels of government—state, county, municipal and school board. … 

Let’s tell our citizens the truth—today—right now—about what failing to do strong reforms costs them.

One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits — a total of $3.8m on a $120,000 investment. Is that fair?

A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it “fair” for all of us and our children to have to pay for this excess?

The total unfunded pension and medical benefit costs are $90 billion. We would have to pay $7 billion per year to make them current. We don’t have that money—you know it and I know it. What has been done to our citizens by offering a pension system we cannot afford and health benefits that are 41% more expensive than the average fortune 500 company’s costs is the truly unfair part of this equation.

New Jersey isn't the only state being sunk by public employee unions and the politicians who buy their votes and support with future taxpayers' money. As Doug Ross pointed out, California, New York, Illinois, and Massachusetts, to name just a few, are in the same leaking boat. And those union workers who think they've got it made now are going to end up all wet.

Herb Stein famously said, "If something can't go on forever, it won't." Retirees collecting more than they ever earned while working, 50-year-olds retiring at 90% of their highest salary (indexed for inflation), employee pension and health plan contributions in the single digits (and declining in some places) while unfunded pension liabilities have grown into the trillions — these things simply can't go on forever. Taxes can't be raised high enough to let this continue. Something's going to have to change, and soon. 

In addition to a more balanced mix of employer and employee contributions and an actuarially sound schedule of benefits, I suggest one simple rule change for all government workers (heck, for everyone with a defined-benefit pension plan): Retire after 30 years if you want, but pension payments don't begin until age 65. If you're only 50, go get another job for the next 15 years (that's what many of them do anyway, collecting both a paycheck and a pension, and eventually getting two pensions). 

* In Firefox 3.5, this website doesn't lay out properly, and some of the text is cut off. It's fine in IE 7. Or you can click Print this page, which opens a new window containing the whole speech. Just cancel the Print dialog and start reading (that trick also saves you a lot of clicking, since otherwise the speech spans 9 rather short pages). 

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Budget madness

Posted by Richard on February 2, 2010

In the New York Post, Brian Riedl tried to put the President's breath-taking 2011 budget into perspective (bold emphasis added):

Last year, Obama swept into office promising to make tough choices — and then released a budget proposing the largest debt-and-spending spree in American history. This year, he's at it again: Over 2010-2019, his new plan boosts spending another $1.7 trillion and the deficit by $2 trillion over what he proposed last year.

In fact, this year's budget shows yearly deficits as much as 49 percent larger than even last year's bloated proposal. This spending spree will drive up both taxes and deficits to levels unseen in US history.

Nor are the Obama deficits a temporary result of the recession. Despite a modest recovery, the 2010 budget deficit will be higher than the 2009 deficit. Nearly 42 cents of each dollar Washington spends will be borrowed.

Even by 2020 — which Obama's planners assume will be a time of peace and prosperity — annual deficits would still exceed $1 trillion. By that point, nearly a fifth of all taxes would go toward paying the interest on this record debt.

The president who said "I didn't come here to pass our problems on to the next president or the next generation — I'm here to solve them" would, over the next decade, dump $75,000 per household in added debt into the laps of our children and grandchildren. 

Those disturbing budget numbers include the three-year "freeze" (starting next year) that the President bragged about as proving he's a fiscally disciplined deficit hawk — a "freeze" that will theoretically prevent a pitiful $20 billion of additional spending in a budget of nearly $4 trillion (that's $4,000 billion for the math-challenged).

I can think of only three explanations for what the Obama administration is doing to this country:

  1. The President and his top advisors are cynical manipulators, saying what they're saying to fool us, and doing what they're doing to accumulate power and wealth for themselves and their friends, while betting that the day of reckoning will fall on someone else's watch.

    If that's the case, they're like many politicians who preceded them, but on a much larger and more reckless scale. And they're much more ignorant and lacking in judgment.

  2. The President and his top advisors genuinely believe that they can improve the economy and make us all better off by spending in excess of 25% of GDP and enacting massive tax increases, especially (but not exclusively) on "the rich" — i.e., the producers, the people and businesses that create jobs and wealth.

    If that's the case, they're out of their minds. Completely delusional.

  3. The President and his top advisors are rabid leftist ideologues intent on deliberately destroying capitalism and dragging down the successful and productive regardless of the effect on the economy. They're determined to create a more egalitarian (albeit much poorer) society, no matter what the consequences.

    If that's the case, there is no dissuading them, compromising with them, or appealing to their patriotism, values, or concern for average Americans.

I'd like to believe that #1 is the case (because then they could be reasoned with, cajoled, bullied, or bribed). But their utter failure to adjust after multiple electoral warnings (including an astonishing repudiation in Massachusetts), their unwillingness to "triangulate" a la Clinton and tack to the center even a bit, their dogged determination to "double down" regarding takeovers of health care, energy, etc., and their unrelenting focus on wealth redistribution — these things make it more and more likely that, sadly, either #2 or more likely #3 is the case.

As the late Herb Stein said, "If something cannot go on forever, it will stop." This fiscal insanity clearly can't go on forever — or even, I suspect, for a decade. It will stop either because people with a modicum of good sense and concern for the nation recognize the danger and make it stop or because the dollar and the economy completely collapse.

But it seems that the former are not in charge.

That must change, and the sooner the better. This November would be good.

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Udall’s promises cost ten times Schaffer’s

Posted by Richard on October 30, 2008

The National Taxpayers Union Foundation (research arm of the National Taxpayers Union) compared the campaign platforms of the U.S. Senate candidates in Colorado, Nebraska, and New Mexico, and assessed the fiscal impact of their promises. In the Colorado race, Mark Udall's promises are far more expensive than Bob Schaffer's:

In preparing the study, NTUF reviewed the candidates' campaign Web sites and news reports to find any proposals that would impact the federal budget. Cost estimates come from a variety of independent sources, including Congressional Budget Office reports and data from NTUF's BillTally cost-accounting system, which since 1991 has computed a net annual agenda for each Member of Congress based on their sponsorship of bills. Among the findings:

  • Udall has offered 54 proposals that would affect federal spending – 25 of which would increase annual outlays, three of which would decrease expenditures, and 26 of which have unquantifiable fiscal effects — for a net annual spending hike of $55.3 billion.
  • Schaffer has offered 41 budget-related items — nine of which would boost annual federal spending, three of which would cut it, and 29 of which have costs that could not be calculated – for a net annual spending hike of $5.8 billion.

In fact, of the six candidates in the three states analyzed, Mark Udall is by far the biggest spender. The runner-up, at $25 billion, is New Mexico Democratic candidate Tom Udall. Maybe it's something in the DNA.

The most frugal of the six is New Mexico Republican candidate Steve Pearce, with a net increase of only $345 million. 

I suspect that most of the estimates significantly understate the true cost. Many of the campaign promises have a fiscal impact judged "unquantifiable." I strongly suspect that "unquantifiable" is not "costless" — not by a long shot.

The analyses for all six (in PDF form) are linked on this summary page.

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